Sen. Obama on Economics

Economic illiteracy spares no party, no candidate. Dean Barnett has an interesting piece in The Weekly Standard about what Barack Obama says when he doesn't have a Teleprompter to read from. In the speech in question, in Virginia, Sen. Obama tells us what he thinks about the role of business in society:

Other improvised moments also contradicted the generally lofty tone of the Obama campaign. At one, point when addressing what we have to do for the economy, Obama ad-libbed, "The insurance and the drug companies aren't going to give up their profits easily . . . Exxon Mobil made $11 billion this past quarter." This is the kind of empty class warfare shtick that earned John Edwards an early exit from the race. What's more, it displayed the kind of simplistic sloganeering that Obama had previously eschewed.

Obama's shot at Exxon Mobil's profits is strikingly disingenuous. He seems to be implicitly saying that the healthy earnings are good news for Mr. Exxon and Mr. Mobil, who will promptly stash most of the profits underneath their obviously outsized mattresses. The two will then likely invest the remainder in foreign sweatshops that will facilitate the outsourcing of even more American jobs.

Of course, who benefits from corporate earnings is a slightly complex matter, and thus vulnerable to simplistic demagoguery. Just ask John Edwards. But Barack Obama is far too intelligent to not realize that many of the school teachers and union workers and working moms that so often people his more elegant speeches likely have an interest in Exxon Mobil's profits either from their retirement plan's portfolio or their union's holdings or their own investments that they actively manage.

In a sense Mr. Barnett too misses the bigger picture as much as Sen. Obama, in that the main beneficiaries of high (at least in an absolute if not rate-of-return sense) oil profits are not just shareholders or workers, but customers. High profits make it worthwhile for Exxon/Mobil to employ the resources it directs to get gasoline to the gas stations, at a time when a lot of other people want oil too. This is profits as a way of facilitating social coordination, one of the least well understood virtues of a market economy.

I am a little disappointed, because I argued not too long ago that Sen. Obama at least appears aware of the notion of opportunity cost in ways that other candidates of both parties are not. Perhaps that view deserves a rethink. He makes a lot of other remarks in the speech at variance with the postpartisan man we are all used to seeing, for example making remarks in a very similar vein about the drug companies. The whole thing is worth a read.